Chinese smartphone maker LeEco has pulled out from a $2 billion acquisition deal with US-based Vizio, reports Reuters. A LeEco spokesperson told the publication that a “Chinese policy factor” led to the scrapping of the deal. The reports also come at a time when LeEco’s co-founder Jia Yueting had admitted that the firm is running out of cash, in an alleged letter to employees in its bid to expand its businesses from electric cars to smartphones.
Founded in 2012, VIZIO manufactures branded consumer electronics products including Smart TVs, speakers, and a SmartCast app for streaming content from smartphones and other devices onto VIZIO TV’s. Note that LeEco also manufactures smart LED TVs.
In September last year, LeEco had raised over $1 billion for its electric car division, and said that it would use the funds for building a ‘global electric transportation ecosystem.’ Earlier this year, the company began construction of its planned $3 billion electric car manufacturing facility in China. But it looks like the company might have to pause investments and withdraw from certain categories, to keep sustainable.
In India, the Chinese manufacturer reportedly laid off almost 85% of its staff; its India unit COO Debashish Ghosh has confirmed his exit to MediaNama. We have emailed LeEco asking whether it would continue operations in India, and will update once they respond.
LeEco had plans to expand outside domestic market
The decision to cancel the VIZIO deal also comes at a time when the Chinese manufacturer slated plans to expand outside its domestic market. LeEco’s CEO Yueting Jia stated in his letter to employees that the company had plans to expand into Hong Kong, India, Russia, and US, and that India was “on the priority list”.
In India, LeEco planned to invest $10 million in developing cloud infrastructure for delivering content across mobile devices and smart TVs. In April, LeEco had filed an application with the FIPB, seeking approval for opening single-brand retail shops in India.
China deals in the US: Interestingly, Chinese major Alibaba’s $880 million merger deal with US-based MoneyGram had run into trouble following an unsolicited proposal from Euronet, a Kansas-based electronic payments company. The deal could be influenced by President Donald Trump’s “America First” policy, as per this Bloomberg report.